When discussing and looking over contractor insurance, the most prevalent product that most would relate to the profession would be professional indemnity insurance. Although now we see the policy as standard within the contracting market, this has not always necessarily been the case. The contracting profession as we know it is obviously not the oldest and most traditional lines of work, but insurance has grown and adapted with and around the industry as it has progressed.
Historically, professional indemnity insurance was relatively restricted and limited to traditional markets, and protection was not broad when it came to covering professional sectors and did not have a range of many possible professions under its levels of cover. It was in fact far more concentrated on the traditional professions, such as solicitors, accountants, architects and engineers, and those in need of policies were limited to a few specialist insurers.
Throughout its life, professional indemnity insurance has served its purpose well within the insurance market, but its importance to contractors is where its effects have been greatly realised. For limited company professionals, the insurance cover protects their finances and status, covering all costs and efforts should a liability claim arise due to professional negligence.
Professional negligence can have many meanings, all stemming from the errors that one makes within the workplace or on behalf of their professional position (fundamentally). This does not simply mean however that liability claims only arise when you spill a mug of coffee over a computer keyboard, they can be both far more devastating to a client, and far less obvious.
As a means of cover, professional indemnity insurance can protect the policy holder from any claims of negligence arising from error, misfortune or accidents that have occurred and subsequently lost the end client money. Examples of this could be if an IT contractor was to fail or crash a system that has lost business money, then they would potentially be liable for negligence, thus the professional indemnity policy would then provide cover.
One of the predetermined terms in a proposed contract for services carried out between a professional contractor and their end client is that the work done will be carried out with reasonable care, skill and security. If they then fail to exercise this agreed level of service however, and as a result of this the end client suffers a financial loss, the client will in turn sue the contractor for negligence, and thus a liability case is opened. It is scenarios like these that professional indemnity insurance shows its worth, acting as a way in which a contractor can safeguard themselves, having the knowledge and peace of mind that if they were sued for negligence, for whatever reason, their financial assets would be protected.
There are many cover policies for contractors to choose from, and all of them are highly valuable in their specifically designed area. Professional indemnity insurance however is an insurance that has many hidden and additional qualities that make it widely popular and necessary throughout a number of different sectors as opposed to one single field.
